US and UK Forge Pharma Agreement: Zero Tariffs and Higher Value Thresholds

The United States and the United Kingdom have finalized a significant pharmaceutical pricing and trade agreement that eliminates tariffs on medicine imports between the two nations. Additionally, this deal raises the UK’s National Institute for Health and Care Excellence (NICE) cost-effectiveness thresholds by 25%. The new thresholds are expected to enhance access to life-saving medications, with the UK committing to a range of £25,000 to £35,000 per quality-adjusted life year (QALY), up from the previous £20,000 to £30,000. This marks the first substantial increase in over two decades and will affect both new appraisals and those currently underway.

Dr. Samantha Roberts, Chief Executive of NICE, emphasized the importance of this agreement, stating, “In a health service funded by general taxation, it is right that the government decides on the level of health spending in the UK. The newly agreed thresholds aim to support the life sciences sector and broader economy.” According to NICE estimates, these higher thresholds will enable recommendations for an additional 3 to 5 medicines or indications each year.

New Framework and Investment Commitments

The agreement also introduces a new value set for assessing health-related quality of life, derived from surveys of thousands of UK residents evaluating various health states. This value set will complement the EQ-5D-5L tool, which is widely used for healthcare treatment decisions and health research. Following peer review and publication, this framework is expected to positively influence cost-effectiveness assessments for medicines.

As part of the negotiations, the UK has committed to reducing the repayment rate under the Voluntary Pricing and Access Scheme (VPAG) to 15% by 2026, a decrease from current levels. The United States Trade Representative (USTR) confirmed this commitment, which aims to ensure the sustainability of pharmaceutical pricing.

In exchange for these pricing concessions, the UK secured a unique exemption from all pharmaceutical and medical technology tariffs imposed by the United States. This exemption includes protection from potential Section 232 tariffs and ensures the UK will not be targeted in any Section 301 investigations through the end of President Trump’s term. As a result, the UK becomes the only country with zero-tariff pharmaceutical access to the US market under these terms.

Industry Reactions and Future Outlook

In light of this agreement, Bristol Myers Squibb has announced plans to invest over $500 million in the UK over the next five years, focusing on research, development, and manufacturing operations. Chris Boerner, CEO and Chair of the company, described the deal as a sign of progress, stating, “This agreement is a sign of progress and one that creates an environment conducive to our continued presence in the UK.”

USTR Ambassador Jamieson Greer remarked, “Today, the United States and the United Kingdom announce this negotiated outcome pricing for innovative pharmaceuticals, which will help drive investment and innovation in both countries.”

This deal comes at a crucial time, as several major pharmaceutical companies, including Merck and AstraZeneca, have previously scaled back their investments in the UK. Earlier in the year, Merck abandoned plans for a £1 billion research center in London, citing concerns over the UK’s attractiveness for life sciences investment post-Brexit. Similarly, AstraZeneca paused its £650 million UK investment package in September 2025.

The new agreement aims to reverse this trend by improving market access conditions and fostering a more favorable environment for pharmaceutical innovation in the UK. As both countries move forward, the outcomes of this landmark agreement will be closely monitored by industry stakeholders and policymakers alike.